Survival Strategies In Recession –The Five Essentials

2016 has ended and we have started another interesting year, we cannot but ask ourselves questions like; how will 2017 be? Will the recession be over soon and what must we do to stay afloat in times of recession? These are very important questions we should ask as we kickoff business this year. 

The word recession is no longer new to us, it is all around us. But what is recession? The National Bureau of Economic Research (NBER) defined a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in a real gross domestic product (GDP), real income, employment, industrial production and wholesale-retail sales”. Economic recession can also be defined as a negative in the real GDP growth rate of a country for two consecutive quarters (say first and second quarters). Judging by the above definition Nigeria is experiencing economic recession, since her first and second quarters growth in 2016 were -1.7% and -2.06%.

We have been here for more than three quarters and we are not quite sure when it will be completely over. The causes of this recession and the suggested solutions have been a major topic of discussion by major actors in Nigeria and beyond. The bottom line is that the International Monetary Fund (IMF), as well as the Central Bank of Nigeria (CBN), have all agreed that Nigeria’s economy has plunged into recession.

The attendant fall out of recession both locally and abroad, is not palatable to both individuals and the business world. People are being laid off from work, prices of commodities have sky rocketed, hunger is in the land, crime rate is on the increase etc.  So what do we do as business organizations?

I guess the big question should now be - What must I do to stay afloat in business? Do we need strategies to stay afloat? Can we create value and become even wealthier at this time? I think the answer is a resounding, yes. 

We need some simple but powerful strategies to get through this period. Some call it “Recession Strategies” but I like to refer to them as “Value Creation Strategies”. If we are in agreement, then let’s go through these few value creation thoughts to help us manage our businesses through these times of recession.

1.  We need a strategic plan. Many business owners/entrepreneurs have made money doing something they love doing and have not really had a structure around it. We produce and we sell off what we have and everyone is happy. This will not work now because the dynamics have changed out there. We need a business plan that is focused on ‘business survival’. While strategy is the guiding path, culture is the driving path every business needs to be stable and deliver value consistently. According to Bill Gates, “The most important ‘speed’ issue is often not technical but cultural. It is convincing everyone that the company’s survival depends on everyone moving as fast as possible.” The two are very important for strategic planning. There is always a big difference between businesses that operate on strategic plans and those that don’t. If you do not have capacity to develop one, engage a trusted consultant. We can no longer do without strategic plans.

      2.  Marketing, Marketing & Marketing. This is the time to invest in great marketing - Great marketing is more than ideas. It's about getting in front of the right people at the right time. You have to create quality awareness for your business and the solutions you provide at this time, more than ever. When I say marketing, I mean the process of identifying and anticipating the needs of your target audience and meeting those needs at a profit. When this is properly done, your solutions fit customer needs and would sell itself. This is not the time to cut back on marketing and advertising budget but the time to be deliberate about it and ensure proper targeting. You cannot serve a customer you do not know or understand. You can also not sell value that nobody knows about. Marketing will help you understand the needs and aspirations of your customers and guide you in the way you deploy your resources to reach and meet their needs at a profit. Marketing is the engine of your business. Imagine what happens when the engine of your car or machinery is bad or not functioning well. Its bad news. We therefore must get deliberate with marketing – create great products, right price, convenience channels and effective and efficient promotions.

3.  Customer Experience. These days, customers no longer buy products or solutions, they buy the whole experience. The times we are in call for consistency in the experience we deliver. There are four experience levels – No Experience, Random Experience, Predictable Experience and Branded Experience. There is no room for businesses in the first two levels. Your customer wants to know and be sure of what to get when they come to you irrespective of the touch point. We have to invest in the little things that will ensure that we deliver on the promises we make in a manner that is satisfactory and consistent. Branded experience is where to be. It calls for deliberate focus on customer service, serving your customers well at every TOUCH POINT. We must endeavour to meet the customers at their point of need.

4.    Reduce overheads. Overhead is a major issue for most of us. It’s even more challenging in times of recession. “Watch the costs and the profits will take care of themselves.” – Andrew Carnegie

This is a time tested value creation strategy. Cutting back on all unnecessary business expenses will free up capital for you to put on productive ventures. To survive a recession, you must be careful with respect to business expenditures. If your business spends money on frivolous things such as parties, vacations etc and other things that have no direct impact on your company’s growth, then it is time to cut back on them.

5.   Exemplary leadership. This works like magic. Are you going to cut back on salaries? Will an increase in productivity keep your business afloat? If your answer to these questions is yes; then lead by example. If you are going to increase work time and cut back on salaries; start with yourself. Take a pay cut and work longer hours; this way, your staff will see the amount of effort you put in and with that, nobody will have the right to complain.

We can go on and on but the fact remains that we have to look inward to see what would work best 

for us given the type of businesses we are in. Are there other tactics to creating business value 

during recession? My answer is yes. You can talk to other business owners within or outside your 

industry and see what they are doing to stay afloat. Some of the steps they have taken may be 

applicable to your situation but you will never know until you try.

Creating value in a way that is sustainable during recession would require creativity and innovation. 

We need a strategic plan that is deliberately executed with the customer being at the centre and ensuring that cost is kept under control. Leadership must also be by example. These are simple but very useful strategies for the times we are in. There are other ways to cope with this period of recession that can be applicable only to your business or industry so it is up to you to figure out such.